RMO No. 25-2002 — Deletes and creates Alphanumeric Tax Codes (ATC) of revenue sources for proper classification of taxes Digest | Full Text

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City September 30, 2002 REVENUE MEMORANDUM ORDER NO. 25-2002 SUBJECT: Deletion and Creation of Alphanumeric Tax Codes (ATCs) of Revenue Sources for Proper Classification of Taxes TO : All Collection Agents, Revenue District Officers and Other Internal Revenue Officers Concerned I. Objectives : To facilitate the proper identification and monitoring of Withholding Tax collections based on BIR Form No. 1606 (Withholding Tax Remittance Return for Onerous Transfer of Real Property Other Than Capital Asset-Including Taxable and Exempt), BIR Form 1600 (Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld) and BIR Form No. 0605 ( Payment Form), and for Integrated Tax System (ITS) purposes, the following ATCs are hereby deleted and/or created: A. The following ATCs are hereby deleted: KIND OF TAXES ISSUANCE/ LEGAL BASIS/ ATC REASONS 1. ATCs on Creditable There are only two ATCs assigned for Withholding Tax on Sale, individual & corporate creditable Exchange or Transfer of Real withholding taxes across four tax rates. Property Other Than Capital For proper monitoring of collection from Assets, Sold by an Individual, this source, each tax rate for individuals Corporation, Estate, Trust : & corporations will have separate ATCs a. Individual (1.5%, 3%, 5%, WI 155 7.5%) WC 155 b. Corporate (1.5%, 3%, 5%, 7.5%)

KIND OF TAXES ISSUANCE/ LEGAL BASIS/ ATC 2.On Percentage Taxes Withheld: REASONS WB101 a. Tax on banks and non- For purposes of proper monitoring of WB112 collections on percentage tax withheld, banks financial the existing ATC across all rates should WB120 WB201 intermediaries - on interest, be deleted. Separate ATCs must be WB202 assigned per rate commissions and discounts paid to banks and non-bank financial intermediaries arising out of lending activities as well as financial leasing , on basis of the remaining maturities of the instrument. Tax rates: 5%, 3%, 1%, 0%. b. Tax on finance companies � -do- on interest, commissions and discounts paid from their loan transactions from finance companies as well as financial leasing based on the remaining maturities of the instrument. Tax rates: 5%, 3%, 1%, 0%. c. Tax on agents of foreign -do- insurance companies. Tax rates: 5% and 10% d. Tax on sale, barter or -do- exchange of shares of stock: � Sale or exchange through initial public offering - Tax rates: 1%, 2%, 4% � Sale or exchange through secondary public offering - Tax rates: 1%, 2%, 4%

B. The following ATCs are hereby created: KIND OF TAXES ISSUANCE/ LEGAL BASIS/ ATC REASONS 1. Creditable Withholding Tax on WI 555 Sec. 2.57.2(J) of RR No. 2-98 as WI 556 Sale, Exchange or Transfer of amended by RR No. 6-2001 and RR No. WI 557 WI 558 Real Property Other Than 12-2001 WC 555 . WC 556 Capital Assets, Sold by an WC 557 WC 558 Individual, Corporation, WB301 Estate, Trust: WB302 WB303 a. Individual WB304 � 1.5% � 3% � 5% � 6% b. Corporate � 1.5% � 3% � 5% � 6% 2.On Percentage Taxes Withheld: a. Tax on banks and non- banks Sec. 121 of RA 8424 Sec .5.116(a)(5)(a) of financial intermediaries - on RR No. 2-98 interest, commissions and discounts paid to banks and non-bank financial intermediaries arising out of lending activities as well as financial leasing , on basis of the remaining maturities of the instrument. � Short term maturity ( not in excess of 2 yrs.) � 5% tax rate � Medium �term maturity (over 2 yrs to 4 yrs.) � 3% tax rate � Long-term maturity (over 4 yrs to 7 yrs) � 1% tax rate � Over 7 years � 0% tax rate

KIND OF TAXES ISSUANCE/ LEGAL BASIS/ ATC REASONS b. Tax on finance companies � WB311 on interest, commissions and Sec. 122 of RA 8424 WB312 discounts paid from their Sec .5.116(a)(5)(a) of WB313 loan transactions from WB314 finance companies as well as RR No. 2-98 financial leasing based on WB120 the remaining maturities of Sec. 124 of RA No. 8424 WB121 the instrument: Sec. 5.116 (A)(8) of RR No. 2-98 WB201 � Short term maturity ( not in RR No. 4-2002 WB202 excess of 2 yrs.) � 5% tax WB203 rate Sec. 127(b) of RA No. 8424 Sec. 5.116(a)(11) of RR No. 2-98 WB206 � Medium �term maturity WB207 (over 2 yrs to 4 yrs.) � 3% Sec. 127(c) of RA No. 8424 WB208 tax rate in relation to RA No. 1051 & Sec. 5.11(a)(11) of RR No. 2-98 � Long-term maturity (over 4 yrs to 7 yrs) � 1% tax rate � Over 7 years � 0% tax rate c. Tax on agents of foreign insurance companies: � Insurance Agents � 10% tax rate � Owner of the Property � 5% tax rate d. Tax on sale, barter or exchange of shares of stock: � Sale or exchange through initial public offering : i) Not over 25% - 4% tax rate ii) Over 25% but not exceeding 33 1/3% - 2% tax rate iii) Over 33 1/3% - 1% tax rate � Sale or exchange through secondary public offering : i) Not over 25% - 4% tax rate ii) Over 25% but not exceeding 33 1/3% - 2% tax rate iii) Over 33 1/3% - 1% tax rate

KIND OF TAXES ISSUANCE/ LEGAL BASIS/ ATC 3. On Fines and Penalties: REASONS FP041 Fines and Penalties on Monthly Sec. 248 of RA No.8424 Percentage Tax Withheld (tax RR 2-98 as amended by RR 6-2001, rate: 50%, 25%) RR 12-2001 and RR 4-2002 The existing ATC � FP040 � under RMO No. 14-99 shall refer to the fines and penalties on quarterly percentage taxes and the new ATC � FP041 � shall pertain to the fines and penalties on monthly percentage taxes. II. Repealing Clause : This Revenue Memorandum Order revises portions of all other issuances inconsistent herewith. III. Effectivity : This Revenue Memorandum Order shall take effect immediately. (Original Signed) GUILLERMO L. PARAYNO, Jr. Commissioner of Internal Revenue b-3